Small-Scale Gas-To-Liquids Gains Momentum

CompactGTL gets order for Kazakstan plant

By Roberto Chellini

Published: 05/12/2014 07:00 AM

To date, there are only three commercial gas-to-liquids (GTL) plants in the world — in Malaysia, South Africa and Qatar. A fourth is expected to come into operation in Angola this year. Adoption of GTL was limited as gas had been considered a costly feedstock relative to crude oil. However, with the present crude oil prices, the industry is starting to reconsider the commercial viability of GTL projects in North America and Central Asia.

Shale gas in North America and restrictions on gas flaring in Central Asia are now driving the market to look more closely toward smaller size GTL plants which, if not enjoying the economy of scale, are more flexible and easy to realize. Unlike larger GTL projects, which seek to profit from sales of the final oil products produced through low gas feedstock costs, the goal of smaller GTL projects is simply to tackle the problem of gas flaring. Hence, the opportunity cost of choosing GTL production over other modes of gas utilization — which will require far larger quantities of gas to be viable — is much lower for small GTL projects. Moreover, the modular nature of small GTL plants could also speed up construction for faster monetization. Therefore, despite comparable costs, smaller projects could be deemed more economical than the penalties firms could face from gas flaring.